The Assessment Centre method to the selection

of Key Account Managers under aspects of the

Transaction costs

Study Programme

Master of Business Administration (MBA)

Module:

Human Resource Management

Assignment:

No. 1/1

Author:

Uwe Schindler

1st Academic Semester 2007/8

Place, Date:

Hamburg, January 20th, 2008

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The Assessment Centre method to the selection of Key Account Managers under aspects of the Transaction costs __ I

Executive Summary

To create long-term and sustainable successful relationships to key customers

(Key accounts) are one of the main figures in successful business in industrial

sales and marketing. To solve this challenge special Key Account Managers with

special key qualifications are necessary. To select and recruit these Key Account

Managers the tool of the Assessment Centre is helpful. Standardized Assessment

Centre does not lead to a selection of the most of the key qualifications of Key

Account Managers, because no standardized tests exist. Therefore companies

using the Assessment Centre method to select Key Account Managers have to

design the Assessment Centre in that kind that it measures the necessary key

qualifications and tasks. All the necessary activities regarding the pre-phase of

contractual conclusions, like the Assessment Centre to the selection of the right

person, develop Transaction costs which can have an impact to contractual

transaction after a decision as well. How to design the AC to measure the key

qualifications of Key Account Managers and to achieve by this way a minimization

of the TAC is the main question answered in the assignment.

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The Assessment Centre method to the selection of Key Account Managers under aspects of Transaction costs

II

Table of Contents

1

Introduction 1

2

Transaction costs theory 2

3

Key Account Management 3

3.1 Term, importance, basic principle, and goals 3

3.2 Task spectrum and instruments of the Key Account Manager 5

3.3 Demarcation of the KAM from conventional sale 5

4

Assessment Centre 6

4.1 Term, history, and ranges of application 6

4.2 Characteristics and participants 8

4.3 Components of the AC 8

5

Assessment Centre to select Key Account Managers 9

5.1 Selected relevant TAC of the AC with the selection of KA-M 9

5.2 Some aspects of application of the AC to reduce TAC 11

6

Conclusion 15

Bibliography IV

Appendix . VI

ITM ­ Checklist XIII

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The Assessment Centre method to the selection of Key Account Managers under aspects of Transaction costs

III

List of Abbreviations

AC Assessment

Centre

cp. compare

e. V.

eingetragener Verein (German term)

e.g. for

instance

ed. edition

fig. figure

HR Human

resources

ILM

Internal Labour Market

incl. include

KA Key

account

KAM

Key Account Management

KA-M

Key Account Manager

KA-Ms

Key Account Managers

KA-RM

Key Account Relationship Management

KAs Key

accounts

no.

number

p. page

pp. pages

rev. revised

TAC Transaction

costs

tab. table

vol.

volume

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The Assessment Centre method to the selection of Key Account Managers under aspects of the Transaction costs

1

1 Introduction

One of the most important tasks in sales is the development of long-term and

sustainable relationships to key customers (Key accounts). The relationship with

KAs creates the success of enterprises and its sustainable ability to survive in

competition on the market. The requirements at co-workers this challenge

successfully to master is very high. For this reason special key qualifications are

demanded from those co-workers, who are concerned with the structure and

development of the relations with key customers. So therefore one of the most

important tasks in the context of the concerned personnel work is the selection of

suitable high-level personnel (Key Account Managers) which meets these

requirements. To be able to select these KA-Ms enterprises use often the tool of

the AC which is regarded in this assignment under aspects of the TAC.

This assignment answers the question how to design an AC to select KA-Ms by

focus on their needed key qualifications to minimize TAC. To answer the question

the assignment uses aspects of the TAC-theory, introduces the basics of KAM, and

the AC-method by evaluation of selected scientific literature.

The assignment starts after this introduction with chapter 2 which gives an briefly

overview about the TAC-theory and introduces it in its relation to the topic and from

two helpful perspectives.

Chapter 3 provides an overview about KAM and focuses in the first part on the

term, the importance of KAM, its basic principles, and its goals. The second part

follows with focus to spectrum of the tasks of the KA-M and the necessary

instruments, followed by part three which demarcates the KAM of the conventional

sale.

Chapter 4 discusses the AC in the first part by introduction of the term, the history

of the AC, and its ranges of application, followed by the second part, which covers

the characteristics of an AC and its participants. Part three closes this chapter by a

introduction of the AC-components.

Chapter 5 discusses the AC to select KA-Ms by a focus to selected relevant TAC of

an AC at KA-M-selection and finishes with some aspects of application of AC to

reduce TAC.

The assignment finishes with a conclusion, which gives an evaluation by the author

and an outlook.

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The Assessment Centre method to the selection of Key Account Managers under aspects of the Transaction costs

2

2

Transaction costs theory

The TAC theory is based on the research of Coase which was published in 1937.

The subject of the Transaction cost theory is the question over a possible

dependence of the choice of the organization form and co-ordination form on socio-

economic exchange relations with focus on the arrangement of efficient

mechanisms with the completion on economic exchange actions between

individuals and organizations.1 In that sense a transaction is the transmission of a

property or service inclusive the achievement of the appropriate rights of disposal.2

In the context of transactions, costs are caused ­ named transaction costs ­ for

preparation, agreement, required adjustment, and control of achievement

relations.3 Appendix 1, fig. 1 presents - with refer to Albach - different development

forms4 of transaction costs.

Williamson placed on the base of the work of Coase a partitioning of the TAC5 -

presented in Appendix 2, fig. 2 - in relation to his estimation: ex-ante and ex-post.

He defines ex-ante transaction costs as costs for searching and information, for

preparation of contracts, for its negotiation, and as costs for the security of

agreements. As ex-post TAC Williamson concerns to costs for adjustments, cost for

the tuning of details as well as to costs for controlling and monitoring, and for

penetration of contracts. TAC are a measure for the efficiency of the evaluation of

the degree of achieving a goal and for the optimization of the selected organization

form. It is in its optimum, if transaction costs are in its minimum and dependent

from interconnection between measured variables (environmental factors) and

behaviours (human factors).6 The measured variables depend on the uncertainty

into a business relation and the benefit, which results from another than the

originally planned use of the investment.7 The more specific the investment is, the

more limited is its use for another use, which leads to high TAC - in a case of

omission of achievements - and on one hand to a close connection of the investor

1 Cp. Zernott (2004), p. 48.

2 Cp. Picot / Reichwald / Wiegand (1998), p. 41.

3 Cp. Picot (1982), p. 270.

4 Cp. Albach (1988), pp. 1160-1161.

5 Cp. Williamson (1990), pp. 22-24.

6 Cp. Gruner (1997), p. 46.

7 Cp. Williamson (1989), p. 139.

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